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Cross-listing pursuit of unseasoned foreign firms after going public in the U.S

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  • Valero, Magali
  • Lee, Hei Wai
  • Cai, Nianyun (Kelly)

Abstract

We examine a company's cross-listing decision with a unique sample of unseasoned foreign firms that went public in the U.S. and later cross-listed abroad. We find that these firms are motivated by their pursuit of global growth opportunities in both the capital and product markets. They strategically bond with the U.S. market through their U.S. IPOs to signal their commitment to increased shareholder protection, which facilitates their future capital raising efforts. Their higher quality is evidenced with characteristics of larger firm size, larger issue size, being prominent in their home countries, underwritten by prestigious underwriters, with lower issue costs and greater analysts' coverage than their non-cross-listing peers. Further analysis shows a positive valuation effect and increased liquidity for their U.S. shares around the cross-listing event. Additional findings suggest that foreign issuers seek cultural or geographical proximity when they further cross-list abroad.

Suggested Citation

  • Valero, Magali & Lee, Hei Wai & Cai, Nianyun (Kelly), 2009. "Cross-listing pursuit of unseasoned foreign firms after going public in the U.S," Journal of Business Research, Elsevier, vol. 62(8), pages 797-804, August.
    • Handle: RePEc:eee:jbrese:v:62:y:2009:i:8:p:797-804
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    3. Cai, Kelly Nianyun & Lee, Hei Wai & Valero, Magali, 2010. "Changing underwriting practices on underpricing of U.S. global initial public offerings," Journal of Business Research, Elsevier, vol. 63(12), pages 1317-1323, December.
    4. Alhaj-Yaseen, Yaseen S. & Lam, Eddery & Barkoulas, John T., 2014. "Price discovery for cross-listed firms with foreign IPOs," International Review of Financial Analysis, Elsevier, vol. 31(C), pages 80-87.
    5. Chen, Mei-ping & Lee, Chien-Chiang & Hsu, Yi-Chung, 2011. "The impact of American depositary receipts on the Japanese index: Do industry effect and size effect matter?," Economic Modelling, Elsevier, vol. 28(1-2), pages 526-539, January.
    6. Tourani-Rad, Alireza & Gilbert, Aaron & Chen, Jun, 2016. "Are foreign IPOs really foreign? Price efficiency and information asymmetry of Chinese foreign IPOs," Journal of Banking & Finance, Elsevier, vol. 63(C), pages 95-106.
    7. Banalieva, Elitsa R. & Robertson, Christopher J., 2010. "Performance, diversity, and multiplicity of foreign cross-listing portfolios," International Business Review, Elsevier, vol. 19(6), pages 531-547, December.
    8. Yaseen S. Alhaj-Yaseen & Eddery Lam & John T. Barkoulas, 2012. "Going public abroad: the dynamics of return spillovers in an atypical international cross listing case," Applied Financial Economics, Taylor & Francis Journals, vol. 22(24), pages 2035-2046, December.
    9. Zijian Cheng & Charles P. Cullinan & Zhangxin (Frank) Liu & Junrui Zhang, 2021. "Cross‐listings and dividend size and stability: evidence from China," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 61(1), pages 415-465, March.
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